Why Are Financial Statements Prepared on a Comparative Basis

question 12

Multiple Choice

Why are financial statements prepared on a comparative basis?

• A)To provide users with easy comparison with the industry.
• B)To provide users with a perspective on the economy.
• C)Because making comparisons using accounting information can be difficult and misleading.
• D)Because making comparisons significantly contributes to the interpretation of accounting information.

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Definitions:

Promote Efficiency

The act of enhancing the performance and productivity of a system or process, reducing wastage of resources.

Thomas Malthus

Thomas Malthus was an English cleric and scholar, influential in the fields of political economy and demography, best known for his theory that population growth will always tend to outstrip the food supply.

Essay on the Principles of Population

A work by Thomas Malthus that discusses the potential negative effects of population growth on resources and living standards.

Marginal Cost

The cost of producing one additional unit of a good or service, often used in decision making about production levels.